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French police smash illegal Bitcoin exchange

French police have dismantled an illegal Bitcoin exchange, placing two people under formal investigation and seizing 388 virtual currency units worth some 200,000 euros, in the first such operation in Europe, a public prosecutor said Monday.

Two people in the Riviera coastal cities of Cannes and Nice were placed under formal investigation on Friday and detained on suspicion that they operated a website which illegally sold and lent Bitcoins to its users.

During a raid last week on one of the suspects' homes, investigators seized a total of 388 Bitcoins as well as credit cards and computer hardware.

Olivier Caracotch, prosecutor in the southwestern town of Foix, told FRANCE 24 that the exchange was uncovered after a retired police officer alerted financial investigators after buying Bitcoins on the site.

"This is the first time that an illegal exchange platform for Bitcoins like this one has been dismantled in Europe" he said.

The arrests came after a near four-month-long investigation which last week ended with police raids in Cannes and Nice as well as in Brussels, Belgium.

The two suspects were being investigated on possible charges of illegal banking, money laundering and illegally operating a gambling website.

Caracotch said the suspects claim they were not aware of the illegality of operating the online platform.

The website’s administrator is also suspected of money laundering and is separately being probed for planning to launch an illegal casino online, but more details on those allegations were not immediately available.

Police said the 2,750 illicit transactions were carried out on the site between November 2013 and July 2014, involving at least 2,500 Bitcoins – valued at more than 1 million euros.